PacWest, Western Alliance Shares Face Selling Pressure Again: What's Going On?

PacWest Bancorp PACW and Western Alliance Bancorp WAL shares are leading regional bank stocks lower Tuesday on the heels of a relief rally that saw several bank names bounce off the lows. 

What Happened: PacWest led the sector higher after the company cut its dividend in an effort to conserve cash late Friday.

PacWest declared a quarterly cash dividend of 1 cent per share, payable on May 31 to stockholders of record on May 15. The bank also declared a dividend of $0.4845 per depositary share on its preferred stock, payable June 1 to stockholders on record as of May 15. 

"Given current economic uncertainty, recent volatility in the banking sector and potential changes in regulatory capital requirements, we view reducing the dividend as a prudent step to accelerate our plans to build capital to CET1 of 10%+," said Paul Taylor, president and CEO of PacWest.

JPMorgan also upgraded Western Alliance shares to Overweight late last week and set a price target of $46, sparking a rally in the beaten-down stock.

Why It Matters: Regional bank stocks have faced heavy selling pressure since the failure of Silicon Valley Bank and Signature Bank. Just last week, JPMorgan acquired a substantial majority of assets and assumed deposits and other liabilities of First Republic from the FDIC.

First Republic’s collapse marked the largest bank collapse since the 2008 financial crisis. Broader concerns around the banking sector have continued to pressure the financials.

PACW, WAL Price Action: PacWest shares were down 4.83% at $5.68 and Western Alliance shares were down 4.24% at $26.16 at time of publication, according to Benzinga Pro.

Photo: Peggy_Marco from Pixabay.